Thursday, 10 May 2012

KUALA LUMPUR (May 10): The US$20 billion (RM61.4 billion) refinery and petrochemical integrated development (RAPID) project to be undertaken by Petronas in southern Johor will be timely in meeting burgeoning demand for energy and petrochemical products especially in Asia in the next 20 years.

To be launched by The Sultan of Johor Sultan Ibrahim ibni Almarhum Sultan Iskandar on Sunday, the project would also enhance both Malaysia's and the region's petrochemical industry, attracting investments from world class oil, gas and petrochemical firms.

It would transform southern Johor into a refining and petrochemical centre, complementing existing complexes in Malaysia's eastern corridors and in Singapore.

More importantly, the sprawling 2,000 hectare RAPID complex would also trigger economic activities for Pengerang, creating thousands of jobs in view of the massive spin-offs from ancillary and supporting services.

Petronas chief operating officer Datuk Wan Zulkiflee Wan Ariffin said timely implementation of RAPID would be crucial as global energy demand was set to increase between 38% and 39% in the next 20 years.

"This is the largest complex Petronas would be undertaking, with the refinery, earmarked for commissioning by end-2016, able to refine 300,000 barrels of crude oil per day while petrochemical plants would come on stream in 2017," he told Bernama.

It would be bigger than that of Petronas' Melaka, Kertih and Gebeng complexes combined in a single location.

As far as end products and applications for petrochemicals are concerned, "we take for granted day-to-day living conveniences such as plastics and food wrapping".

"(But) their demand growth would be significant in Asean given its proximity (to Malaysia) and its combined population in excess of 600 million," he said.

Wan Zulkiflee, who is also Petronas executive vice-president for downstream business, said RAPID would be able to meet this demand.

RAPID would also be able to meet the government's requirements for higher emission standards for petroleum products to be imposed in the near future.

"We want to be prepared for this,” Wan Zulkiflee said, adding that gasoline and diesel to be produced by RAPID's refinery would meet the Euro 4 and 5 fuel specifications.

The refinery will be designed to process imported crude oil, including Petronas' equity crudes from some of its overseas upstream ventures.

"We can't totally depend on local crude to feed our refinery to meet demand, so diversification of feedstock leads to security of energy supply in the local market," he said.

Other petroleum products from the refinery would include jet fuel, while a naptha cracker would churn out three million tonnes of products such as ethylene, propylene, C4 and C5 olefins to feed the petrochemical plants in the complex.

A stand-alone crude oil refinery would be a tough business, Wan Zulkiflee said, which was why coupling it with a petrochemical complex in an integrated development promised higher economic returns on investment.

More than that, RAPID is not just about a refinery and petrochemical plants, but would create a new industry spawning tremendous spin-offs down the value chain offering opportunities for other companies.

"Like in Kertih, we foresee end-product manufacturers like cable and plastics producers, and even specialty products like vitamins, personal care products and perfumes, to take advantage of the complex's output," he said.

Providing a progress update on the project, he said the detailed feasibility study was completed end-2011 and "we are now in the front end engineering design (FEED) stage while land acquisition has already started".

Concurrently, the national oil corporation was screening potential joint venture partners who can bring in technologies, as well as, expertise in project management, plant operations and marketing to form partnerships for various facilities within RAPID.

The equities that joint venture partners will take in RAPID's various facilities would determine how much they invest in the US$20 billion project, with Petronas expected to take up majority portions. — Bernama